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Bank of America suspends plans to raise dividend, buy shares

By Michael J. Moore and Zachary Tracer Bloomberg News

Posted:
04/29/2014 12:01:00 AM MDT

Updated:
04/29/2014 02:08:43 AM MDT

Bank of America Corp. fell the most since November 2012 after suspending a dividend increase and $4 billion of planned share repurchases because of an error in its stress-test submission to the Federal Reserve.

Bank of America will resubmit its proposal, the Charlotte, N.C.-based lender said Monday in a statement. The company said it incorrectly adjusted for cumulative realized losses on structured notes issued by Merrill Lynch.

CEO Brian T. Moynihan had planned on boosting the bank's quarterly payout to 5 cents a share from 1 cent, five years after the firm cut the dividend to a token amount during the financial crisis. Bank of America said Monday its revised proposal will probably feature lower payouts than in its original plan.

"Bank of America is by far not the first big bank to make a mistake in its CCAR submission," David Hilder, an analyst at Drexel Hamilton LLC in New York, said in a phone interview, referring to the Fed's Comprehensive Capital Analysis and Review.

Bank of America discovered the mistake last week as it prepared its 10-Q quarterly regulatory filing and immediately notified the Fed, said a person with direct knowledge of the process. The error had gone undetected since the firm's acquisition of Merrill Lynch in 2009, said the person, who requested anonymity because the information hasn't been made public.

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